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Commerce Meets Finance...Again

By Manuel Silva Martínez, General Partner at Mouro Capital

June 30th - 2021

At Mouro Capital, we take a broad view of the future of financial services, and look beyond today’s industry boundaries. We ask ourselves fundamental questions and build strong theses around topics we are passionate about, while keeping an open mind to new ideas that challenge our beliefs.

As such, we know that commerce and banking are old friends, and that the evolution of banking into the industry we recognise today is intimately linked to trade and commerce. We know that the need for financial services was created by the traders and farmers travelling and selling their products across Assyria and Sumeria in 2000 BC. We know that, as banking systems globalised and became ever more sophisticated, the links between commerce and banking have only grown deeper and more complex. 

We also know, however, that we are living through an age of almost constant change. The digitisation of commerce is transforming the way people and businesses relate to physical goods, and this is impacting the entire commerce value chain, end to end.

Over the past 18 months in particular, the shift of retail commerce to digital channels has been significant, to put it mildly. I won’t delve into those figures now – there’s no need to state the obvious – but it is useful to highlight the many consequences of such dramatic and fast-paced change.

Incumbent retail brands have had their leadership challenged, with many losing their spots to newer names in e-commerce, and the physical business districts of our cities have changed, maybe forever. Consumer demand for immediate access to physical goods has never been higher, and they don’t care about the challenges of last-mile fulfilment. They want what they have ordered, in as close to real-time as possible.

Due in part to this change in consumer perspective, riders, bikers and other delivery personas have replaced offline stores for last-mile distribution companies and become the de facto method of meeting the demands of our new consumption habits. Brick and mortar stores, which used to serve as micro-warehouses for last-mile shopping, have been displaced further up the value chain by a variety of near-proximity “dark structures”, such as dark kitchens and dark stores. These changes began with the revolution in the consumer commerce environment, but that is just the tip of the iceberg. The most significant changes, the ones that are reshaping the industry to its core, are taking place in commerce supply chains.

It is here, further upstream, where the means of global production – from factories to shipping companies and warehouses – have needed to adapt to a truly just-in-time world. They have become excessively optimised, where even household brands lose their meaning in favour of scaled-up production and distribution networks.

And, of course, it all comes back to data. This ecosystem becomes more interconnected each day, and is now governed by layer upon layer of data that brings some order to this complex matrix.

Alone, all these changes are important and speak to the bigger picture; together, they are transformative. Fundamentally, e-commerce now goes far beyond payments and shipping.

In the context of every component of the commerce maze being continually reinvented, redesigned, and digitised, the opportunities for financial services in the space are practically infinite. In the fintech industry, we have witnessed the rapid growth of ‘buy now pay later’ start-ups and scale-ups across the world, primarily as facilitators of ecommerce, with some of the latest fintech unicorns and decacorns – like Klarna and Affirm – emerging in this category.

In addition, the amount of start-ups fuelling liquidity through supply chains in order to improve access to working capital for middlemen and commercial partners, and even enabling better inventory rotation, is on the rise. This is ‘classic fintech’: reinventing traditional financial services such as consumer lending, trade finance, receivables finance, and factoring, in a way that is more tailored to the new habits of commerce than incumbent offerings.

More interestingly, in our opinion, is the flurry of other start-ups exploring the cross-over between financial services and supply chain technologies. As the boundaries between the industries get blurrier and blurrier, we predict that they will develop evermore radical innovations over time. These will be the unicorns of tomorrow, finally uniting under one roof these two old friends: finance and commerce.If this sounds like your business, and you’re looking for investment, please don’t hesitate to reach out. Submit your pitch here, and a member of the team will be in touch. 

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